Arena slumps on continued concerns for Belviq

Shares of San Diego-based Arena Pharmaceuticals Inc. (Nasdaq: ARNA) slumped Tuesday after the company said European Union regulators still have questions about its weight-loss drug Belviq.

Arena said a committee that advises the European Medicines Agency is asking for more information about Belviq, including heart valve issues and psychiatric side effects as well as tumors that were observed during studies on rats. The advisory panel also asked the company to justify the risks and benefits that Belviq offers.

Arena and its partner, Japanese drugmaker Eisai Co., asked European Union regulators to approve Belviq in March 2012. Later that year an advisory panel recommended against approving the drug, but the companies are working to respond to regulators' concerns and are still trying to get clearance for the drug. Arena and Eisai expect the advisory committee to issue a recommendation during the first half of 2013.

The Food and Drug Administration approved Belviq in late June, and the companies plan to start selling it in the United States soon. The FDA approved another weight loss pill, Vivus Inc.'s Qsymia, around the same time it approved Belviq. However Belviq went on sale before the end of 2012.

Jefferies & Co. analyst Thomas Wei said he thinks Arena shares will be volatile because investors don't think Belviq will be approved in the EU, and have taken a dim view about the sales potential of Belviq by itself. Wei said he is more optimistic about the potential of a combination of Belviq and phentermine.

Arena shares lost 99 cents, or 10 percent, to $8.79 in afternoon trading. The stock traded as high as $13.50 on June 27, the day Belviq was approved.